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Asia: Shares hit 3-week high ahead of crunch Fed meeting

Thu, Sep 17, 2015 - 9:01 AM

Pedestrians holding umbrellas stand while waiting to cross a road in front of an electronic stock board displaying the closing figure of the Nikkei 225 Stock Average outside a securities firm in Tokyo, Japan, on Wednesday, Sept. 9, 2015.

PHOTO: BLOOMBERG

[TOKYO] Asian stocks hit a three-week high on Thursday after a jump in oil prices lifted Wall Street, with many investors taking last-minute positions ahead of a crucial US Federal Reserve policy announcement.

Precious metal prices jumped as some market players took low the inflation reading to mean a smaller chance of an immediate rate hike.

Gold prices rose to 1.3 per cent on Wednesday to US$1,119.50 per ounce. Silver jumped 3.9 per cent to US$14.96 per ounce, its highest level in more than three weeks.

The dollar also lost its edge in the currency market after the data, with the currency's index against a basket of six major currencies slipping to 95.323 from this week's high of 95.845. "We believe that the Fed will refrain from raising rates today. But at the same time, it will indicate that it is highly likely to raise rates by the end of the year," said Tomoaki Shishido, fixed income analyst at Nomura Securities.

But there is little clarity on what the Federal Reserve will do on the whole.

US money market futures hardly moved, still pricing in about one-in-four chance of a rate hike on Thursday.

On the other hand, the US two-year note yield hit a 4 1/2-year high of 0.819 per cent as investors expect the Fed will start its tightening cycle soon as the economy recovers, even if it does not do so this month.

The rise in Treasuries yields, also likely reflected selling by China, which needs to cash out dollars for its intervention to support the yuan, market players said.

The data published late on Wednesday showed China's holding of US Treasuries dropped to US$1.241 trillion in July from US$1.271 in June.